Research on regional variation in spending and quality within Medicare has shown that higher levels of spending are not positively correlated with higher quality of care and in some cases are negatively correlated. These findings have led some to suggest that spending in many areas of the country can be reduced sharply without any meaningful loss in the quality of care. Such observations jeopardize public commitment to devoting resources to health care. The Director of the Congressional Budget Office in his testimony before the Senate Budget Committee in June of 2007 suggested that the weak link between variation in spending and quality pointed toward cost control opportunities that will not affect outcomes. Research aimed at understanding the links between variation in spending and quality is of central importance for public policy. Almost no attention has been given these issues in the area of mental health delivery. It is especially important to study these issues in the mental health arena since a larger share of mental health spending is borne by government (than for general medical care) and therefore the province of public policy. We propose to address these important issues by pursuing the following three specific aims. AIM 1: To use Medicaid claims data to define a series of quality, access and spending measures relevant to state policy for individuals with severe mental illness and other mental illnesses. We will characterize the variation in these measures and produce basic summaries of local mental health care system performance. Our empirical analysis will focus on longitudinal data from the states of Florida and California and put those patterns into a larger context by examining variation within 10 other state Medicaid programs. AIM 2: To estimate the causal link between quality and access and spending. We will estimate models of disease-specific spending at the individual level. We also compare the relationship of quality and spending indicators at the local level for mental illness to the relationships for other medical conditions including: diabetes, congestive heart failure (CHF), asthma, coronary artery disease, and chronic obstructive pulmonary disease (COPD). AIM 3: To propose and implement as a pilot a "County Mental Health System Report Card" for use by state mental health policy leadership. The Report Card will be developed with the aid of state Medicaid and mental health policy makers. This application focuses on one of the most critical policy research questions in health and mental health care: How do we understand observed variation in mental health spending, quality and access to care? Little is known about such variation in the mental health area. We expand methods of the science of variations and apply them to mental health care using data from the Medicaid program.